OTTAWA, April 9, 2020 /CNW/ - Today the Office of the Superintendent of Financial Institutions (OSFI) announced further regulatory adjustments to support the financial and operational resilience of federally regulated banks and insurance companies. The measures focus primarily on capital adequacy requirements for these institutions as well as changes in their reporting requirements.
Each sector that OSFI oversees—federally regulated deposit-taking institutions, insurance companies and private pension plans—has different regulatory obligations and requirements. OSFI continues to develop and refine its expectations for those sectors to provide flexibility and clarity so that they can effectively respond to current challenges.
Key measures announced for banks include:
- Providing temporary exclusions to the leverage ratio requirements so that banks are able to support lending.
- Lowering the capital floor for banks using the Internal Ratings Based approach to credit risk to preserve the risk sensitivity of the framework and support lending.
- Providing clarity on the application of the April 3 release by the Basel Committee on Banking Supervision to ensure the items noted are fit for purpose in the Canadian context.
- Providing additional details on the expected credit loss capital treatment and the associated regulatory reporting, as outlined in OSFI's March 27 news release.
For more detail, please see the letter issued to all Federally Regulated Deposit-Taking Institutions.
Key measures announced for insurers include:
- Determining that under the Life Insurance Capital Adequacy Test (LICAT), life insurers granting payment deferrals due to COVID-19 will not be subject to increased capital requirements for related mortgages, loans and leases.
- Determining that life, property & casualty, and mortgage insurers that approve premium payment deferrals to policyholders will not be subject to increased capital requirements related to those deferred premiums.
- Introducing a smoothing technique to LICAT interest rate risk requirements to reduce increased and unwarranted volatility in required capital.
For more detail, please see the letter issued to all Federally Regulated Insurers.
Key measures announced for regulatory reporting include:
- Delaying the implementation of changes to specific regulatory returns to limit the impact on institutions, while ensuring that important data continues to be collected.
- Granting extensions and not applying late filing penalties on a case-by-case basis to those institutions facing significant operational or technical challenges.
- Issuing targeted ad-hoc reporting requests where the information requested is valuable for assessing industry resilience or developing critical policy decisions.
For more detail, please see the letter issued to all Federally Regulated Financial institutions.
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"The regulatory changes announced today, like those we announced earlier, are credible, consistent, necessary and fit for purpose in the Canadian context. They ensure these institutions can continue to respond to this unprecedented economic disruption while remaining well capitalized and resilient." — Jeremy Rudin, Superintendent.
About OSFI
The Office of the Superintendent of Financial Institutions (OSFI) is an independent agency of the Government of Canada, established in 1987, to protect depositors, policyholders, financial institution creditors and pension plan members, while allowing financial institutions to compete and take reasonable risks.
OSFI supervises more than 400 federally regulated financial institutions and 1,200 pension plans to determine whether they are in sound financial condition and meeting their requirements.
SOURCE Office of the Superintendent of Financial Institutions
Media Contact: OSFI - Public Affairs, [email protected], 343-550-9373
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